Bitcoin is back above $8,000 after climbing more than $1,000 in less than an hour yesterday.
The cryptocurrency's price soared past $7,000 and $8,000 for the first time in more than two weeks in its biggest jump of the year so far, but it edged back to trade between $7,600 and $7,800 for the rest of the day.
However, at the time of writing, bitcoin's price had popped back up, trading 2.65 per cent higher at $8,125.85, according to Coindesk's aggregate index.
Levi Meade, lead investment analyst at UK asset manager Columbus Capital, said:
Bitcoin has been oversold and the situation has been exacerbated by tax selling. In the US , there was estimated to be $25bn of tax liabilities to be paid by April 15.
As sellers have become exhausted, a bull case has risen for BTC on technical grounds.
"There was definitely a case of pent up demand," added Fawad Razaqzada, a technical analyst at Forex. "As prices corrected after their upsurge in 2017, undoubtedly a lot of people who had missed out on that rally probably saw the pullback as an opportunity to buy at relatively cheaper price levels. Eventually the net buying volume exceeded that of selling and prices had to go up in search of liquidity."
Other cryptocurrencies also rode the wave higher.
Ethereum's ether token was trading 5.4 per cent up at $519.07, while bitcoin cash was up 4.17 per cent at $762.98, according to Coindesk.
Litcoin rose just over one per cent to $130.59, and Ripple's XRP climbed 2.62 per cent to $0.64.
Will the rise last?
Razaqzada warned that yesterday's price increase could quickly fade away.
"Thursdays sharp gains does not necessarily mean prices will continue pushing higher now, even if thats what we and others might think. Indeed, it is not uncommon in bear trends to see sharp short-term counter-trend moves every now and again. Typically, these types of moves in bear trends last several days before the downtrend resumes," he said.
"It is definitely worth bearing in mind that not everyone believes in the crypto hype and some have even seen bitcoins past astronomical rise as an opportunity to take the opposite view and short it.
"Still, given the extent of the recent declines, we may see at least a sizeable bounce before the selling probably resumes."